Hariyana Ventures Ltd Management Discussions

Your Directors have pleasure in presenting the Management Discussion and Analysis report for the year ended on 31st March 2023.

INTRODUCTION:

Its no secret that the steel sector in India is one of the fastest growing, in-demand and robust sectors. While the pandemic and global export/import circumstances did cause the sector to slow down for a while, recent development is bringing the sector back to its glory. Today, the Indian steel industry ranks second in global production. This article discusses the Indian steel industry outlook and growth prospects, reasons for growth, and future roadmap. The Indian steel industry outlook for 2023 looks promising with the country gearing to become a US $5 trillion economy by 2030 (or sooner). And as per market predictions and reports, the steel industry in India will play a pivotal role in steering India towards its goal

The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to Indias manufacturing output.

The Indian steel industry is modern, with state-of-the-art steel mills. It has always strived for continuous modernisation of older plants and up-gradation to higher energy efficiency levels.

The Indian steel industry is classified into three categories - major producers, main producers and secondary producers.

Market Size

Indias crude steel production rose by 4.18 per cent to 125.32 million tonnes (MT) in 2022-23, In the preceding 2021-22 fiscal, the country produced 120.29 MT of steel. Domestic consumption of steel rose by 12.69 per cent to 119.17 MT against 105.75 MT in 2021-22.

During the fiscal year 2022-23, exports of finished steel from India at 6.7 MT was lower by 50.2% as compared to exports during FY22, whereas imports at 6.02 MT during FY23 was higher by 29.0% over FY22.

SEGMENT-WISE PERFORMANCE:

The Company trades in a single business segment. In view of sluggish global demand, the Company repositioned some of its supplies to favourable markets. The company has passed through a very unusual phase, any worthwhile comparison of performance between two periods would be inconclusive. There is, yet, considerable scope for improvement. The Company is currently into trading in Steel and iron products.

OPPORTUNITIES AND THREATS:

The biggest opportunity before Indian steel sector is that there is enormous scope for increasing consumption of steel in almost all sectors in India. The Indian rural sector remains fairly unexposed to their Multi-faceted use of steel. The usage of steel in cost Effective manner is possible in the area of housing, fencing, structures and other possible applications where steel can substitute other materials which not only could bring about Advantages to users but is also desirable for conservation of forest resources. Excellent potential exist for enhancing steel consumption in other sectors such as automobiles, packaging, engineering industries, irrigation and water supply in India. The key areas of opportunities can be summarized as:

? Huge Infrastructure demand

? Rapid urbanization

? Increasing demand for consumer durables

? Untapped rural demand

? Increasing interest of foreign steel producers in India

The linkage between the economic growth of a country and the growth of its steel industry is strong. The growth of the domestic steel industry between 1970 and 1990 was similar to the growth of the economy, which as a whole was sluggish. This strong relation in todays environment where the growth of the industry has become stagnant owing to the overall slowdown has resulted in enhanced rivalry among existing firms. As the industry is not growing the only other way to grow is by increasing ones market share. The Indian steel industry has witnessed spurts of price wars and heavy trade discounts, which has impacted the Indian Steel Industry.

? Slow growth in infrastructure development

? Market fluctuations and Chinas export possibilities

? Global economic slow down

STRENGTH:

India has rich mineral resources. It has abundance of iron ore, coal and many other raw materials required for iron and steel making. It has the fourth largest iron ore reserves (10.3 billion tonnes) after Russia, Brazil, and Australia. Therefore, many raw materials are available at comparatively lower costs. It has the third largest pool of technical manpower, next to United States and the erstwhile USSR, capable of understanding and assimilating new technologies. Considering quality of workforce, Indian steel industry has low unit labour cost, commensurate with skill. This gets reflected in the lower production cost of steel in India compared to many advanced countries. With such strength of resources, along with vast domestic untapped market, Indian steel industry has the potential to face challenges successfully. The major strengths can be summarized as:

? Abundant resources of iron ore

? Low cost and efficient labour force

? Strong managerial capability

? Strongly globalised industry and emerging global competitiveness

? Modern new plants & modernized old plants

RISKS AND CONCERNS:

This are inherent in the quality and availability of some of the essential raw materials available in India, e.g., high ash content of indigenous coking coal adversely affecting the productive efficiency of iron-making and is generally imported. Also, Steel is a capital intensive industry; steel companies in India are charged an interest rate on capital as compared to Japan and USA. In India the advantages of cheap labour get offset by low labour productivity; e.g., at comparable capacities labour productivity of SAIL and TISCO is 75 t/man year and 100 t/man years, for POSCO, Korea and NIPPON, Japan the values are 1345 t/man year and 980 t/man year. High administered price of essential inputs like electricity puts Indian steel industry at a disadvantage; about 45% of the input costs can be attributed to the administered costs of coal, fuel and electricity. The major weaknesses can be summarized as:

? High cost of energy higher duties and taxes

? High cost of capital

FINANCIAL HIGHLIGHTS:

Paid up Share Capital of the Company as on 31 March 2023, stands at 58,05,000 divided into 5,80,500 number of equity Shares of Rs. 10/- each fully -paid up.

Income from operation stood at Rs. 7,19,86,223/- for fiscal 2023.

Profit/Loss before Taxes of fiscal 2023 was Rs. (29,64,997)/-.

Basic Earnings per Share for fiscal 2023 was Rs (4.31).

Net Worth of the company stood at Rs. 2,79,60,112/- as on March 2023.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The internal control system is looked after by Directors themselves, who also looked after the day to day affairs to ensure compliances of guide lines and policies adhere to the management instructions and policies to ensure improvements in the system. The Internal Audit reports are regularly reviewed by the management. The Company has proper and adequate internal control system commensurate with the size of the business operations geared towards achieving efficiency in its various business operations, safeguarding assets, optimum utilization of resources and compliance with statutory regulations. Efforts for continued improvement of internal control system are being consistently made in this regard.

HUMAN RESOURCES VIS-A-VIS INDUSTRIAL RELATIONS:

The Companys Human Resources philosophy is to establish and build a strong performance and competency driven culture with greater sense of accountability and responsibility. The Company has taken pragmatic steps for strengthening organizational competency through involvement and development of employees as well as installing effective systems for improving the productivity, equality and accountability at functional levels. With the changing and turbulent business scenario, the Companys basic focus is to upgrade the skill and knowledge level of the existing human assets to the required level by providing appropriate leadership at all levels motivating them to face the hard facts of business, inculcating the attitude for speed of action and taking responsibilities. In order to keep the employees skill, knowledge and business facilities updated, ongoing in house and external training is provided to the employees at all levels. The effort to rationalize and streamline the workforce is a continuous process. The industrial relations scenario remained harmonious throughout the year..

BUDGET 2023-24: ANNOUNCEMENTS FOR THE STEEL SECTOR

In Budget 2023-34, though there were no specific funds for driving growth of the steel sector, there are several opportunities present in other industries that would directly boost the steel industry outlook.

Railways: The governments initiative to redevelop 50+ existing railway stations and the plan to provide a capital of ^2.4 lakh crore to Railways is likely to scale the need for steel.

Logistics: An investment of ^75,000 crore is planned for 100+ critical transportation infrastructure projects that will connect ports, coal, steel, fertiliser, and food grain sectors across the first- and last-mile delivery network. This is expected to improve connectivity and transportation services across major points, in turn leading to a rise in demand for steel.

City development: Urban planning development projects will be undertaken to transform cities into sustainable cities. With the proposed ^10,000 crore annual fund, the goal is to ramp up infrastructure development, especially in Tier II and Tier III cities. This is likely to witness a growth in steel demand, especially for steel girders in infrastructure and TMT steel bars in construction among others.

RECENT DEVELOPMENTS IN THE STEEL SECTOR

The Ministry of Steel signed 57 MoUs with 27 companies for specialty steel under the PLI scheme (Production Linked Incentive). Under the scheme the government has approved a sum of ^6322 crore for steel sector growth. Apart from creating new jobs and contributing to making India the 3rd largest economy globally (by 2030-31), the scheme aims to create an additional capacity of 25 MT of specialty steel in the next five years. (Source: IndiaCSR)

For focused production of value-added steel, collaboration between the 27 companies and the government is crucial

Initiatives like Green Steel and Hydrogen Mission would enable low carbon emissions RSD, new product development, and best practices should be adopted across the steel sector.

As can be seen from the recent events and Indian steel sector overview, theres a promising future for the steel sector in India.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates changes in the Government regulations, tax laws, and other statutes and other incidental factors.